2016 (4) TMI 1344 - AT - Income Tax

TDS u/s 194H - amount held by the banks / credit card agencies as collection charges in respect of credit services provided - addition made u/s 201(1)/201(1A) fr non deduction of TDS - Held that - As perused the cited judgment in the case of JDS Apparels (P) Ltd (2014 (11) TMI 732 - DELHI HIGH COURT) and find the same is relevant for the proposition that Commission to bank on payments received from customers who had made purchases through credit cards is not liable to TDS under section 194H of the Act . Considering all we are of the opinion the decision taken by the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly grounds raised by the Revenue are dismissed.

Summary

Issues:
Appeal against deletion of addition made under section 201(1)/201(1A) of the Act for non-deduction of TDS under section 194H by the assessee company on bank charges for credit services provided.

Analysis:
The judgment involves two appeals filed by the Revenue for the AY 2011-2012, concerning the deletion of additions made under section 201(1)/201(1A) of the Act for failure to deduct TDS under section 194H on bank charges for credit services provided. The Revenue challenged the CIT (A)'s decision to delete the addition, arguing that the relationship between the assessee company and the bank/credit card agencies should be considered as principal and agent, thus necessitating TDS under section 194H. The assessee contended that the relationship was principal to principal, making the TDS provisions inapplicable. The Tribunal referred to a previous decision and a judgment of the Delhi High Court supporting the assessee's argument.

The Tribunal heard arguments from both parties and reviewed the orders of the Revenue Authorities, the Tribunal's previous decision, and the relevant material presented. The Tribunal noted that in a prior case, the Tribunal had dismissed the Revenue's appeal on a similar issue, upholding the CIT (A)'s decision. The Tribunal cited a relevant portion of the previous order to support its decision. Additionally, the Tribunal considered a judgment of the Delhi High Court, which affirmed that commission to banks on payments received from credit card transactions is not subject to TDS under section 194H. Relying on the settled nature of the issue and the precedents, the Tribunal found the CIT (A)'s decision fair and reasonable, leading to the dismissal of the Revenue's grounds.

Since the issues raised in both appeals were identical, the Tribunal applied its decision in one appeal to the other, upholding the CIT (A)'s decision in both cases. Consequently, the Tribunal dismissed both appeals of the Revenue. The order was pronounced in open court on 13th April 2016.